Peru looks to mines - and US upturn - to beat slump

By
James Nelson Goodsell, Latin America correspondent of The Christian Science Monitor /
September 19, 1983

Lima, Peru

If Lima's bus companies have their way, the cost of a ride will soon go up 20 percent to 250 soles - about 12 cents a ride. To financially strapped Limenos, as residents here are called, that increase is simply too much. But the bus companies are adamant. Recent unexpected gasoline price increases make the fare increase essential.

''We didn't expect that gas price boost,'' says Juan Lizarraga Bayon, head of an association of bus drivers. ''But we have to cover it.''

''It has got to stop,'' says independent mayoral candidate Alfonso Grados Bertorini, who has the support of Accion Popular, the government party. His program for stopping it seems vague to some observers. But his campaign managers say: ''But no one else has the answer, either.''

Like other Latin American governments, the government of President Fernando Belaunde has been doing all it can simply to pay off foreign debts and to try to attract new investment to his country.

Peru has managed, just barely, to keep up its foreign debt payments. Total debt is now approaching $12 billion, with $2.4 billion owed to United States banks.

To average Limenos, struggling to pay bus fares, to say nothing of food bills and rent, such figures are too astronomical to comprehend.

The complaints are many. They have been translated into food rioting in some instances and to ''a growing shoplifting problem,'' according to a Lima police spokesman. ''It is the result of people becoming desperate.''

President Belaunde, ever the optimist, is confident that the world economic picture is improving. ''We will benefit from that,'' he says.

Until the economic recovery in the US reaches here, the Peruvian people can apparently expect little improvement. What makes it even worse are these factors:

* Agricultural production during the first six months of 1983 plummeted 7.5 percent from the same period last year. Actually, the picture is even worse - for crop production dropped 14 percent, offset by meat production increases of 6 percent. And this additional meat production results from the decision of cattle herd owners, hard pressed by grazing problems, to take their herds to market rather than to buy feed for the animals.

* Export revenues fell 11.2 percent, to $1.5 billion, in the first six months of this year. The only bright feature in this otherwise dark scenario was a 14 percent increase in mineral exports.

* Floods, landslides, and drought caused almost $1 billion in damage in the first six months of 1983. Petroleum production fell by $200 million as a result of these disasters, representing a 9 million-barrel drop in production.

* Textile production is off 15 percent - with textile exports down 40 percent. This, however, results from the imposition by US customs officials of ''compensatory duties'' on Peruvian textile imports since last November. Peru is currently negotiating with the US to get these duties lifted.

The hope of Peru, a presidential spokesman said, must rest with its mining industry. That's the one current bright spot. Moreover, most mining companies are showing a profit. Employment in the mines and related industries has also taken up a bit of slack in Peru's growing unemployment picture, which now hovers at 20 percent.

''We need more mining,'' says President Belaunde. Most economists here agree. And there is strong backing for government efforts in this direction. But even if more dollars flow into the country to develop mining enterprises, it will be five years or so before the investment yields concrete results.

That raises the question whether Peruvians are willing to wait that long to see results. They are longsuffering, but they have also had to put up with a lot of economic troubles in recent years. Social unrest on a large scale is the alternative.